January 27 2014

Wait! Before You Sign That Next Contract…

By David McMillin

Are you afraid of contract commitment? It’s okay to admit it. Signing your name at the bottom of a contract with complicated legal language can feel overwhelming. Did I just put my organization at risk? Is the face at the other end of the table trying to insert a clause that will leave us on the hook for too much money? Will this meeting actually be able to deliver the number of allotted rooms?

At Convening Leaders 2014, meeting planners and hotel sales representatives joined Tyra Hilliard, PhD, JD, CMP, and associate professor of restaurant, hotel and meetings management, University of Alabama, to review the implications of key contract language. Before you sign another contract, here are some issues that could impact either side of the negotiation table.

Don’t agree to words that define the future.

If Group fails to meet its contractual room requirements, Hotel will be harmed.

Hilliard says that there is a big problem with that statement: it’s hard to say if the hotel will actually be harmed. Hilliard recommends revising any “wills” to “mays.”

“A planner’s group may not fulfill the requirements, but the hotel may be able to sell those rooms at an even higher last-minute rate,” Hilliard says.

However, they may also only be able to sell them at a fraction of the contracted rate, too. The important piece of the equation is that the real impact of failing to fill the block won’t be felt until the future. Leave room to determine that impact after the meeting.

Think beyond your meeting dates.

“Rather than just the specific meeting dates, planners should work to get credit for early arrivals, late departures and staff rooms,” Hilliard said.

Regardless of the initial number of rooms included in the contract when it’s first signed, that projection can wind up looking too big or too small once the meeting dates get closer.

In many cases, contracts for annual meetings are signed years away from the on-site arrival date. A lot can change in that time frame, and Hilliard stresses the importance of inserting a clause to periodically review the contract to determine if the block needs to be adjusted.

Hotels can’t concede everything.

While the potential for attrition penalties can be a big source of frustration for meeting planners, it’s important to remember that the hotelier on other side of the table has to answer to someone, too.

“We all have owners, and owners have budgets and forecasts,” one hotel representative in the audience said.

Failing to fill rooms can pose a big issue for those forecasts, but smaller issues can create more costs for hoteliers, too.

For planners who want to be absolutely sure they’re receiving credit for every room, asking for an audit after the meeting is fairly common. However, Hilliard says that some hotels are charging for audits now, and with good reason: those thorough reviews require additional staff time and resources.

What contract issues have you faced in the past? Is there any language that has caused problems for you?